2 Questions :)

I’m still quite new to trading, and have only been demoing for the last few months. Although i have improved vastly in terms of patience and discipline, I’m still getting screwed over with stop losses and take profits. I prefer to trade on the 4 - 8 hour charts, mainly because i am not infront of my computer for the larger portion of my week. I am using a $20,000 (CAD) demo account. Should I set my SL so that every trade is within the 2-3% range of my total account, or should i base it entirely on the chart, or what? Many many times, i have had a trade close off because price momentarily intersects my SL then starts heading back the other way. (Side note: i am leveraging at 20:1) In regards to TP, what ratio or risk-reward should i be aiming at?

I’m also unsure on what volumes to trade at? Would it be better to make less trades at bigger volumes or many trades at smaller lot sizes?

Any help is appreciated.

The smaller you make your lots, the bigger you can make your stop loss in the 2-3% parameter.

As for your trading using the longer time frames, figure your entry and stop setup.

Then, instead of using a market order, set up a pending order where your stop loss would be, and cut what your initial stop loss would have been in half.

Then leave it alone.

If you get an entry, fine.

If not, fine, and go look for another. Or better yet, cut your lot sizes to a quarter of the size, and set up pending orders on four pairs or so.

When one fails to get an entry, look for another.

You’ll be amazed at the simplicity, and lack of stress. Not to mention it takes no time at all to check over charts on the longer time frames, so you’re not married to a babysitting job all night hoping for a solid entry.

This is a long term game, not a get rich quick scheme.

Good luck!

We call him master tang for a reason

Master Tang,

Thanks for the advice, i definitely do agree that FX is in general a long term game. I will experiment with the pending orders and I must admit my entries are in general very poor…something to work hard on.

Hey Master Tang,

Could you explain that in more detail? Not sure I quite get it…

Regards,
Clark

What part isn’t clear?

I could type a book on it, it would just be easier to type up a chapter or two instead;)

The bottom line is, we’ve all repeatedly entered a trade based on a market entry in which price went up enough or down enough to tag our stops, then went the way we had entered the trade for in the first place.

It’s just a way to let the market put you in or out of a trade, and maximize profit as well.

Hello, and congratulations on learning the discipline and patience. Not many can say the same :slight_smile: When were talking about how much of a position you take, you should never trade over 5:1 leverage (position leverage) of your account. So say you have 20,000, 5x that would be $100,000. So the max leverage you should ever use is 1 standard lot, or 10 mini lots.

Why 5:1? Well lets look at a couple company’s who have gone under because of the leverage they have used. Lehman brothers using ~65:1 and MF Global ~40:1. So you need to find out what the point of diminishing returns is with the way that you trade. I would argue that most systems (if done correctly) are going to be around 3-5:1. But you can calculate your own diminishing returns yourself.

If you are leveraged 20:1 on the position your taking with a 20K account, that means your using around 4 standard lots which is far to many for your account size where you might want to revaluate this strategy.

You ask a lot of good questions, hopefully you’ve found some good answers in here. Keep it safe! Its all about survival :slight_smile:

Thank you guys for your information.

BTW I’m not trading my entire 20k account, i normally only use up half of my margin, and risk about 200 on every trade. I have been experimenting with what amount of leverage to use. I guess it will always be safer to start small, especially since my confidence aint great! So i will figure out how much i want to trade and how to leverage that to meet the 100k target that you suggested.

I love forex. It’s the most frustrating thing in the world. And when i suck at something, i force myself to master it :slight_smile:

Clive-O